Accounting for Governmental and Nonprofit Entities, 18e (Reck)
1) According to the guidance of GASB Concepts Statement 3, financial information can be
communicated by recognition in the financial statements, disclosure in the notes to the financial
statements, presentation as required supplementary information, or presentation as supplementary
information.
2) According to GASB Concepts Statement 1 a primary objective of financial reports is to provide
information useful in determining the accountability of the government.
3) Activities a local government can engage in are classified as governmental, business-type, or
fiduciary.
4) Governmental funds are identical to governmental activities, proprietary funds are identical to
business-type activities, and fiduciary funds are identical to fiduciary activities of a government.
5) Only those governmental and proprietary funds that meet the GASB size criteria for major funds
are reported in separate columns of the governmental and proprietary fund financial statements.
6) Economic resources are cash or items expected to be converted into cash during the current
period, or soon enough thereafter to pay current period liabilities.
7) Governmental funds account for assets but not the liabilities.
8) The types of funds that may be used in governmental accounting are classified into the three
categories of governmental, proprietary, and fiduciary.
9) The governmental funds category includes the General Fund, special revenue funds, debt
service funds, capital projects funds, and internal service funds.
10) Governments can, in part, demonstrate operational accountability by reporting proprietary and
fiduciary fund financial information, as well as all government-wide financial information, using
an economic resources measurement focus and the accrual basis of accounting.
11) All capital assets acquired by or used by a fund should be reported in the fund balance sheet or
statement of net position.
12) Because budgetary accounts are used by governments, government financial statements can
never be said to be in accord with generally accepted accounting principles.
13) The maximum sets of fund financial statements a government would present are three.
14) When revenues are legally restricted by external resource providers or committed by enabling
legislation for particular operating purposes, a private purpose trust fund is created.
15) A debt service fund is used to account for financial resources segregated for the purpose of
making principal and interest payments on general long-term debt.
16) A deferred inflow of resources is defined as “an acquisition of net assets by the government
that is applicable to a future reporting period.”
17) Expenditures are never recorded in governmental funds.
18) Deferred outflow of resources is a type of asset that is unique to government.
19) Revenues is an example of what the GASB terms an inflow of resources.
20) An expenditure is an example of what the GASB terms an outflow of resources.
21) Deferred inflow of resources and deferred outflow of resources would be shown in separate
sections of a government’s statement of net position.
22) In accordance with GASB standards, a deferred inflow of resources is reported on the financial
statements the same as an unearned revenue.
23) The GASB concept statements indicate that an asset that is going to be converted to cash
should be reported at a remeasured amount at the financial statement date.
24) Proprietary funds primarily provide services to the general public for a fee.
25) A permanent endowment is an example of a nonspendable fund balance.
26) Assigned fund balances can be either positive or negative.
27) The General Fund is the only fund that can have a positive unassigned fund balance.
28) The positive fund balance in a special revenue fund must at a minimum be reported as
assigned.
29) Nonmajor funds are not reported on the fund financial statements.
30) There are four major activity categories reported by state and local governments:
governmental, government-wide, proprietary, and fiduciary.
31) Governmental activities include the core services provided by a government, such as public
safety.
32) Which of the following is a primary objective of financial reporting by state and local
governments?
A) To provide information that can be used for capital allocation decisions made by external
investors.
B) To report on the legal requirements imposed on the government by its elected officials.
C) To provide information that can be used to assess a government’s accountability.
D) To fulfill the government’s statutory duty to report on cash received and cash disbursed.